The $2.5 billion-asset ACNB said in a press release that its bid for the $859 million-asset Traditions is expected to be finalized in the first quarter of 2025. After closing, Traditions' shareholders would also receive a quarterly cash dividend equal to about 23 cents a share.
The deal priced Traditions at 109% of its tangible book value.
ACNB "has been executing a multi-year strategic plan to be the community bank of choice in the markets that we serve and thereby deliver superior financial results, performance and value to our shareholders and other stakeholders," James Helt,
"At the core of this strategic plan has been profitable organic and inorganic growth," he added. The scale created by the merger would "provide the resources to expand our presence in York County and enhance our penetration in the vibrant and demographically compelling Lancaster County market."
Traditions has $738 million of deposits and $673 million of loans. It has eight branches, though ACNB expected to close two locations as part of post-closing cost reductions. It plans to cut about 35% of Traditions' annual noninterest expenses.
Traditions' headquarters in York would continue to serve as a regional sales and operations center.
The buyer expects the deal to prove 29% accretive to its 2025 earnings per share, including purchase accounting marks. ACNB expects to earn back an estimated 9.2% dilution to its tangible book value in a little over two years. ACNB expects to incur $17.8 million of merger-related expenses.
Three Traditions directors would join the ACNB board, with Eugene Draganosky, Traditions' chairman and CEO, becoming a vice chair. Thomas Sposito, II, Traditions' president, would become the president of Traditions Bank, which is expected to operate as a division of ACNB Bank.
The top-performing banks with between $10 billion and $50 billion of assets boasted relatively strong loan portfolios and expense control.
The merger adds to
During the current earnings season, several bankers have said a recent rebound in bank stock valuations could drive a surge in deal talks in the second half of 2024. Banks often use their stock to pay for deals, and when buyers' shares are trading at strong levels, that currency is attractive to sellers.
The KBW Nasdaq Bank Index is up about 18% year to date, with more than half of the advance coming in the past month amid growing expectations for a Federal Reserve interest rate cut later this year.
For example, the $5.2 billion-asset Equity Bancshares' CEO, Brad Elliott, said the rally is driving fresh deal talks.
"There are conversations currently happening with stock, and I think it will increase with the stock market recovery," Elliott said on the Wichita, Kansas-based company's recent earnings call. "There's lots of positive momentum in the second half of the year."
Equity's stock has climbed alongside the broader sector, up 14.8% month to date. The company's last two bank deals were all cash, but "stock has come more into play," Elliott said.
"There's a lot of opportunities that we are able to talk about right now. I think people have realistic expectations," Elliott added. "We kick a lot of tires, have a lot of conversations, model a lot of deals and then see if we're the partner they want to pick."
